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Department of Land Economy

Environment, Law & Economics


Multinational Enterprises (MNEs) are key ‘tectonic forces’, shaping the ‘mountains’ in a far‐from‐flat world economic geography. The total value added generated by MNEs accounts for approximately 25 percent of world GDP. MNE foreign subsidiaries alone generate more than 10 per cent of world GDP (UNCTAD, 2015). However, still very little is known about the factors able to shape the longterm location decisions of MNEs and their geography. In particular territorial/spatial factors and local institutional conditions have
been often overlooked in existing MNE location analyses. This paper explores the role of sub‐national institutional quality (Quality of Government) in attracting foreign direct investments (FDI) in the regions of the European Union (EU). Using count data on greenfield FDI in the European TL2 regions for the 2009‐2013 period, the empirical results show that regional quality of government affects the location of inward investment: regions with better government quality attract more foreign investors, even after controlling for
overall country‐level institutional quality. This is particularly true for investment projects in production and R&D activities.

Conversely, service activities are only indirectly affected by the regional quality of government: they tend to follow the location of production investment projects that, in their turn, are attracted by locations with high quality of government.

Keywords: Quality of government, Institutions, FDI, Multinationals, Regions, European Union.

Jel codes: C14, C21, F23, H7, R3

This research is still work‐in‐progress and a draft paper is not available yet.

Key references
Crescenzi R., Pietrobelli C. & Rabellotti R. “Innovation Drivers, Value Chains and the Geography of Multinational Corporations in
”, Journal of Economic Geography, 14 (6), 1053‐1086, 2014
Crescenzi R., Pietrobelli P., Rabellotti R. "Regional strategic assets and the location strategies of Emerging Countries’ Multinationals
in Europe", European Planning Studies, 2016 [in press]


Speaker: Dr Riccardo Crescenzi, London School of Economics



Riccardo Crescenzi is an Associate Professor of Economic Geography at the London School of Economics and the current holder of a
European Research Council Grant. Before joining the LSE Riccardo was a Jean Monnet Fellow at the European University Institute in
Florence. He has been visiting scholar at a number of universities, including the Kennedy School of Government, Harvard University
and the School of Public Policy, University of California Los Angeles (UCLA). Riccardo has provided academic advice to, amongst
others, the European Investment Bank, the European Parliament, the European Commission (DG Regional Policy), the Inter‐
American Development Bank and various regional governments. His research is focused on Regional Economic Development and
Growth, Innovation, Multinational Firms and the analysis and evaluation of European Union development policies.


Wednesday, 24 February, 2016 - 16:00 to 17:00
Contact name: 
Clare Cassidy
Contact phone: 
01223 337154
Event location: 
Mill Lane Lecture Room 1